The company is focusing on extending market access through ongoing technology transitions, particularly in advanced dispense, vertical wire, and thermo-compression bonding (TCB).
Introduction of new products like advanced dispense capabilities scheduled for September at SEMICON Taiwan, highlighting ongoing R&D efforts.
Vertical wire technology is on track with initial high-volume production expected in fiscal 2026, driven by demand for high-bandwidth, low-power memory applications such as mobile HBM and energy-efficient DRAM.
The company emphasizes the importance of fluxless thermo-compression (FTC) solutions, supporting large customers in mass production and planning to ship initial FTC systems for high-power HBM by the end of 2025.
Management sees these technological advancements as key to capturing market share and supporting long-term growth despite near-term industry headwinds.
Supply Chain and Manufacturing Strategy for Capacity Optimization
The company is consolidating low-cost commodity capacity into supporting high-demand, high-margin products, with a focus on hybrid manufacturing strategies.
Progress in qualifying internal wafer fab capacity is ongoing, with key customers supporting this transition.
The strategy aims to support future growth, reduce dependency on external foundries, and improve manufacturing efficiency and margins.
Strategic Focus on New Product Introduction and Customer Qualification
The company is actively working on new product introduction (NPI) and component qualifications with major customers, aiming to enhance margins and support future growth.
Recent awards in the Czech Republic are expected to generate incremental revenue in Q4, indicating a focus on expanding manufacturing footprint.
Fluid Solutions components are being integrated into existing subsystems, which will not increase revenue but will improve margin profiles starting early 2026.
Strategic alignment between product and Fluid Solutions groups is aimed at prioritizing customer qualifications, which will support new business and margin improvements.
The company is investing in final system integrations, including SAP implementation, to streamline operations and improve efficiency across acquired units.
These initiatives are designed to capture additional value and operational alignment, supporting long-term competitiveness.
Adjusted EBITDA was $647 million, up 16% year-over-year, with a 170 basis point margin increase to 15.2%.
Closed Kudu Dynamics acquisition for $291 million net and completed $500 million accelerated share repurchase retiring 3.6 million shares.
Ended quarter with $5.1 billion debt (2.2x leverage) and $930 million cash.
Generated $486 million cash from operations and $457 million free cash flow, with 110% free cash flow conversion.
Leidos reported 4.8% year-to-date revenue growth and a record 15.2% EBITDA margin in Q2 2025, with operating cash flow up 28%.
Non-GAAP diluted EPS grew 22% to $3.21, surpassing the prior quarter's record of $2.97.
Q2 revenues were $4.25 billion, up 3% year-over-year and sequentially despite award delays and contract reviews.
Segment performance: National Security and Digital grew 3% with stable margins; Health and Civil grew 1% with 24.9% margin; Commercial International grew 1% with margin improvement of 780 basis points; Defense Systems grew 10% with margins down year-over-year but up sequentially.
Strategic Focus on High-Value Technologies and Portfolio Rationalization
onsemi is actively exiting noncore businesses and repositioning its sensing portfolio towards higher value segments such as ADAS and machine vision.
The company is ending the end-of-life of certain legacy products, with an expected $50-100 million revenue impact in 2026 that won't repeat.
Investments are focused on next-generation technologies where the company has clear competitive advantages, including intelligent power, sensing, and analog mixed signal technologies.
Dafinchi
